Rolls-Royce has announced that it has signed an agreement to sell its Commercial Marine business, to Kongsberg, for an enterprise value of £500m and net proceeds of around £350m to £400m.

The move follows a strategic review by Rolls-Royce of its Commercial Marine operations announced in January 2018. The sale includes propulsion, deck machinery, automation and control. Rolls-Royce’s Ship Intelligence activities, which have seen the rapid development of technologies to enable remote and autonomous operation of commercial vessels, are also included.

Kongsberg will, through a trading arrangement, continue to have access to products from Bergen Engines, which remains part of Rolls-Royce Power Systems.

Rolls-Royce Power Systems will continue to supply MTU engines to a range of customers in the marine market including operators of commercial vessels and yachts. The Naval gas turbine propulsion activities will continue to be a core part of Rolls-Royce Defence.

Warren East, Chief Executive of Rolls-Royce, said: “This transaction builds on the actions we have taken over the last two years to simplify our business. The sale of our Commercial Marine business will enable us to focus on our three core businesses and on meeting the vital power needs of our customers.”

Geir Håøy, Chief Executive and President of Kongsberg, said: “The acquisition of Rolls-Royce Commercial Marine makes us a more complete supplier to the maritime industry. The maritime industry is becoming increasingly globalised and is undergoing considerable technological and market driven changes. With this acquisition we will strengthen our strategic position with shipowners, shipyards and other customers and partners.”

The transaction has been approved by the boards of both Rolls-Royce and Kongsberg and is expected to close in Q1 2019, subject to clearance from the regulatory authorities.

Arctic Securities is acting as financial advisor to Kongsberg. Thommessen is acting as legal advisor. Arkwright and PWC is acting as due diligence advisor. Eversheds Sutherland advised Rolls-Royce, a longstanding client of the global legal practice.